Post, Avery & Higgins, for appellant. I will undertake to make an agreement with Danson & Williams and Hamblen & Gilbert, for respondent. that party who is successor in interest of the lessor, or who by virtue of any contract with the owner of the fee-simple title to GOSE, J. [1] This is an appeal from a said property has the right and power so to judgment establishing the value of a lease- do, as to the rentals to be paid by the underhold interest in real property, entered at the signed, and that, upon failure so to do, that suit of the respondent, a public service cor- the undersigned will promptly name an arbiporation. The appellant, defendant below, is trator for the purpose of undertaking to fix a corporation engaged in the wholesale and the amount of such rental, as in the lease retail harness, saddlery, and manufacturing provided. The undersigned requests to be business. In November, 1903, the Northwest- promptly notified of the name of the person ern & Pacific Hypotheekbank leased to the or corporation who has the right, power, and appellant a brick building in the city of Spo- authority to agree upon the amount of such kane for the term of five years, beginning rental, and, in case of failure so to agree, January 1, 1904, and ending on the 31st day to name an arbitrator for and on behalf of of December, 1908, at a monthly rental of the lessor. The undersigned further begs to $175 per month, payable monthly and in ad- advise you that its representative will meet vance upon the 1st day of each month dur- the person who has the right, power, and auing the term. The lease contained the thority to agree upon the rental on behalf following provision: "Provided, however, of the lessor, or the representative of such that the said lessee, its successors and as- person or corporation, at any time and place signs, shall have the privilege of renewing to be named by them, for the purpose of unsaid lease for the term of five years from dertaking to mutually agree upon the amount the expiration thereof upon giving written of such rentals." The respondent disregardnotice at least ninety (90) days before the ed the notice until after the expiration of said expiration, that they desire so to do, the original term and until after January 8, at such rental as may be mutually agreed 1909. On January 25, 1909, the respondent, upon by the parties hereto, their successors through its attorneys, addressed the followor assigns, and in case they are unable to ing letter to appellant: "January 25, 1909. agree upon the rental to be paid, then the To the A. A. Kraft Company, Spokane, Washamount of said rental shail be fixed by arbi- ington-Gentlemen: As heretofore stated to trators. The method of which said arbi- you orally the undersigned, the North Coast tration shall be as follows: One arbitrator Railroad Company, is the owner of lot 1 shall be chosen by each of the two said and part of lot 2 in block 3 of resurvey and parties hereto, and if the two persons so addition to Spokane Falls (now Spokane), chosen shall be unable to agree, then a and of the building situate thereon, it having third person shall be chosen by each of the purchased same for railroad purposes. On two said arbitrators, and the decision of account of its needing said property for railthe majority of the three arbitrators shall road purposes it cannot renew the lease, be binding upon the parties hereto." It is which you heretofore held and which expired further provided that the lessors may re- on December 31st, 1908, for a longer period enter and repossess themselves of the prem- than eighteen months from January 1, 1909. ises, if the rent is not paid on the day stip- It is willing to renew said lease for said time ulated in the lease or for default in any of and to allow you to occupy said premises at the covenants; that the lessee shall not as- a reasonable rental, said rental to be agreed sign the lease or sublet the premises with- upon between it and your company, and in out having first obtained the written con- case you cannot agree it will appoint an arsent of the lessor; that the lessee will not bitrator, as provided in said lease, who, with make or suffer to be made any change or al- such arbitrator as you shall name, shall find teration in the leased premises, either ex- the reasonable rental value of said premises ternal or internal, without first obtaining the for said period as provided in said lease. written consent of the owner; that it will This will give you ample time to secure annot allow the same to be used for any illegal other location and building for your use." or immoral purposes, but that it will use the In response to this letter, the appellant adsame as a wholesale, retail, and manufactur-vised the respondent, in writing, to conduct ing harness and saddlery or similar busi- its negotiations with its attorneys Messrs. ness. On the 22d day of October, 1907, the respondent obtained a contract for the purchase of the leased premises, and acquired the fee on April 20, 1909. On the 24th day of September, 1908, the appellant gave notice to the respondent that it exercised its privilege to renew the lease conformably to the stipulation for the period of five years from and after December 31, 1908, and that it Post, Avery & Higgins. This action was commenced in April, 1909. The order of necessity having been entered, the trial of the question of the value of the leasehold interest commenced on November 29, 1909. The rental value for the renewal period of five years had not then been fixed by any of the methods agreed upon in the lease, although eleven months had elapsed since the 2, 1909, the appellant paid to the agent of | purpose, and defendant would decline to the respondent, who had theretofore collect- name an arbitrator at this time." The reed the rent the sum of $175. This check spondent made no reply, and the trial prowas cashed by the agent and its check for ceeded. The respondent in moving for a stay the same amount was sent to appellant on and in its offer in open court to name an January 8th. The appellant returned the arbitrator did not state whether it adhered check, and thereafter it. tendered to the re- to its former policy of fixing the rent for 18 spondent $175 on the first of each month. months only or for 5 years. It is apparent Before writing the letter of January 25th, from the remarks of the appellant's counsel there was some conversation about the rent that his understanding was that the offer to between the respondent's attorneys and the arbitrate did not contemplate the fixing of appellant, and between the former and the the rent for five years. If he misconstrued attorneys for the latter. The respondent, the motion, it was the respondent's duty to however, took the position in each of the so advise him. It did not do so. The court conversations, as it did in its letter, that it then, over the obj ions of appellant, prowould not participate in fixing the rent for ceeded to and did hear the testimony of a renewal term longer than eighteen months witnesses as to the rental value of the propfrom January 1, 1909. The appellant stated erty for the renewal term. It is apparent that it considered that the payment of the that, after a delay of 11 months and the rent on January 1, 1909, fixed the rental respondent's refusal to meet the appellant's value of the premises at $175 per month for demand for the appointment of arbitrators the renewal term, but expressly directed the to fix the rent for the renewal period, it respondent to take the matter up with its could not require the appellant to proceed attorney as it did not care to talk about it. with such haste in the naming of an arbitraPending the trial, the respondent's attorney tor and in having the question of rental value moved for a stay of proceedings until "ap- passed upon by them. The time allowed by praisers could be appointed and the rental the court was not sufficient. A reference to value determined by them." In passing upon the provisions of the lease makes it clear that it contemplates an adjustment of the rent for the new term before the expiration of the original one. This is made apparent by the clause authorizing a re-entry for a failure to pay the monthly rent in advance. the motion the court stated that he was “inclined to grant a stay for a very short time so that the trial can proceed tomorrow, with a view that the parties agree upon arbitrators to fix the rental value, if they cannot agree among themselves." The attorney for the respondent then stated that he would name an arbitrator "at once; by morning, if not sooner." Thereupon the appellant's attorney inquired: "Your honor will grant a stay until tomorrow morning?" And the At the close of the case the court found the facts as follows: "(1) That the fair rental value of the premises occupied by the A. A. Kraft Company for the term of five years commencing January 1, 1909, was $375 per month. (2) That the fair rental value court replied: "I think not longer than the for the remainder of the term from this date afternoon, so as to proceed at that time." is $425 per month. (3) That the loss of profThe attorney for the appellant then stated its during the time required by said the A. that he did not think that he was required to cation is the sum of $80. (4) That the damA. Kraft Company to remove to another lostate in open court at that time whether he would name an arbitrator. The court then ages which said the A. A. Kraft Company is adjourned for the day. Upon the convening tioner in this condemnation proceeding is entitled to recover of and from said petiof court the next day, the appellant's attor- the difference between the rental value of ney stated: "That his understanding of said premises per month on January 1, 1909, plaintiff's motion and the court's ruling was and on the date of the trial, November 29, that arbitrators should be appointed at this 1909, or $50 a month for the unexpired term time to determine the amount of rent to of 47 months being the sum of $2,350, and be placed in the lease as though the ar- the loss of profits during the time of removal, bitrators had met before January 1, 1909, or $80, making a total of $2,430"-and enterand for the purposes of this lawsuit only ed a judgment in accordance with the findand not with the intent of allowing de-ings. fendant to remain in possession for the The appellant contended at the trial, and period of five years, as provided in the lease, contends here, that the refusal of the reand as the fact was that the failure to ap-spondent to fix the rent for the renewal term point arbitrators was wholly the fault of in accordance with the provisions of the plaintiff, and plaintiff's attitude clearly indicates that it did not desire arbitration, but was satisfied with the old rent, and had accepted the same, that he believed that it was improper for the court to ask defendant to now arbitrate this question for the purposes of this lawsuit and stay proceedings for that lease and its notice, and the acceptance of the rent on January 2, 1909, at the rate agreed upon in the original lease, fixed the rental which it was required to pay for the renewal term. The respondent's position is that in view of all the facts stated it was competent for the court to fix the rental value of the property upon opinion evidence that may arise between the parties, that submitted for that purpose. [2] The evidence does not show any express direction to the agent to collect the rent on January 1, 1909. Nor does it show that it had been directed not to collect it as it had theretofore done. The fact that it went to the appellant's place of business and demanded and received the rent is a circumstance. to be considered in connection with the respondent's delay in meeting the appellant's demand of September 24th for an adjusting of the rent for the new term. These facts and the old lease were the only competent evidence before the court of the rental value of the property for the five-year term beginning January 1, 1909. The lease provides the manner and form of fixing the rent. The respondent at all times refused to meet the request of the appellant for an adjustment conformably to the lease. It acquired the property subject to the lease, and it was its duty to proceed in accordance with its terms. [3] The fact that it desired to devote the property to a public use within the five years does not change the rule or dispense with its duty in the premises. The renewal of the lease would not prevent the appropriation of the property to a public use. 2 Lewis on Eminent Domain (3d Ed.) §§ 414-416. This rule is based upon the principle that the appropriation of the property of another to a public use is an exercise of sovereignty which cannot be relinquished by contract. The respondent at all times refused to agree upon the rent or to name an arbitrator to fix it for a longer term than 18 months. In other words, it proceeded to appropriate the property in utter disregard of the contract. method must be pursued before either party can resort to the courts for an adjustment. Zindorf Constr. Co. v. Western Am. Co., 27 Wash. 31, 67 Pac. 374; Hughes v. Bravinder, 9 Wash. 595, 38 Pac. 209; Lidgerwood Park Waterworks Co. v. Spokane, 19 Wash. 365, 53 Pac. 352. In Ryder v. Jenny, 2 Rob. (N. Y. Superior Ct.) 56, a lease with covenants for renewal expired on the 25th day of April, 1856. The lease provided that the landlord would execute a renewal of the lease for the term of 21 years, "at such annual rental as should be agreed upon by the parties," and provided for a mode of appraisement in the event that they could not agree upon the rent. The tenant continued in possession until February, 1861, without paying any rent, before asking for a renewal of the lease. On January 30, 1862, an appraisement was made by appraisers chosen by the parties conformably to the lease, and on July 21st following a lease was tendered. The rent under the old lease was $100 per year. The appraisers fixed the rental value at $140 per year. Upon these facts it was held that until the rent was determined and a lease tendered the tenant was only liable for the amount of rent previously paid, and that "the lease was not tendered until July, 1862, and the increased rent only became payable at that time." The respondent relies upon the following authorities: Hegan Mantel Co. v. Cook's Adm'r (Ky.) 57 S. W. 929; Wright v. Hardy, 76 Miss. 524, 24 South. 697; Andrews v. Marshall Creamery Co., 118 Iowa, 595, 92 N. W. 706, 60 L. R. A. 399, 96 Am. St. Rep. 412; 24 Cyc. 1008; Kaufmann v. Liggett, 209 Pa. 87, 58 Atl. 129, 67 L. R. A. 353, 103 Am. St. Rep. 988; Jones, Landlord & Tenant, § 346; Uhrig v. Williamsburg, 101 N. Y. 362, 4 N. E. 745; Lowe v. Brown, 22 Ohio St. 463; and Grosvenor v. Flint, 20 R. I. 21, 37 Atl. 304 They do not support its contention. The Cook Case announces the rule that a reasonable delay in the appraisement does not debar either party from thereafter having the property appraised according to the lease. In the Wright Case there was a stipulation for the selection of appraisers who should fix the rental value of the property in the event of a disagreement between the parties. The lease further provided "that should elther party fail or refuse to make an appraisement, or to select a referee to appraise said lots, the other party may cause said lots to be appraised by three disinterested freeholders to be selected by said party." There In Sherman v. Cobb, 16 R. I. 82, 12 Atl. had been no appraisement prior to the com232, it was held that where a lease provides mencement of the action. It was held that that, upon its renewal, the rent for the ex- "the right to a revaluation has not been fortended term shall be fixed by appraisers, the feited or waived by its not having been made landlord cannot maintain an action for the or insisted upon earlier," and that a court recovery of the reasonable rental value, un- of chancery may fix the valuation. It does til he has exhausted the methods provided not appear from the opinion which party in the contract. Where a contract provides was in default. However, under the clause [4] If it had made a bona fide effort to comply with the contract and had named an arbitrator, and the arbitration had been fruitless, or if the failure to arbitrate had been due to the refusal of the appellant to meet it upon the terms of the lease, then the power of the court to determine the rent at its suit upon opinion evidence could not be questioned. The rule in such cases rests upon the principle that the court will determine the facts at the suit of the innocent party upon the best evidence obtainable, but the court cannot disregard the contract in a suit by the wrongdoer, and make for the parties a contract materially different from the one they made for themselves. These views have abundant support in the adjudged cases. venor Cases announce the rule we have stated, viz., that when the arbitrators have failed to agree, or when one party refuses to proceed in conformity with the contract, the court, at the instance of the innocent party, will determine the question of value. We do not deem it necessary to follow counsel for the respondent in the discussion of the technical differences in meaning between the words "renew" and "extend." [5] The appellant gave the requisite notice, and its right to hold for the extended term thereby became fixed. The only matter left for determination was the appraisement of the rental value of the property. We think that the respondent's attitude upon that question has been such that the rights of the appellant can only be protected by adhering to the view that the rent provided in the lease continued for the renewal term. Aside from the lease and the circumstances of the collection of the rent and the delay of the respondent, there was no competent evidence before the court upon the question of the rental value of the property on January 1, 1909. [6] Evidence was admitted over the objection of the respondent, showing the expense of moving the machinery, stock, and fixtures to a new place of business, the damages to the same resulting from the removal, and the value of the fixtures lost because not removable. These articles were not allowed as specific or independent damages. This is assigned as error. Lewis on Eminent Domain (3d Ed.) § 728, says: "But the damages to personal property, or the expense of removing it from the premises, cannot be considered in estimating the compensation to be paid." A large number of cases are cited as supporting the text. In Pause v. City of At ties were equally at fault, as the power was ample in either to have the appraisement made. The Andrews Case holds that, where the tenant has affirmatively indicated his election to renew, he has done all that is necessary to create a renewal. The same rule is stated in 24 Cyc. 1008, and it is further said that: "While the execution of the lease is not necessary, * it may nevertheless be required by either of the parties after the election has been exercised." The Kaufmann Case is an instructive one. There the lease provided that the lessees should have the privilege of a renewal. It also provided that the rental, in event the lessees elected to renew, should be fixed by arbitrators selected in a specified way; also that, if the arbitrators and umpire failed to agree within a fixed time, then others should be chosen in the same manner. There was no provision in the lease covering the contingency of the failure of the second set of arbitrators to agree. The lessees exercised their privilege of renewal, and gave the stipulated notice. Both sets of arbitrators failed to agree. The landlords then gave notice to the lessees to surrender possession of the premises. Thereupon the lessees filed a bill in equity, praying that the court determine the amount of rental to be paid under the renewal. The court said: "But that in cases of renewal leases the weight of authority clearly favors the view that the tenant in such a case has a quasi proprietorship; a right, lacking merely a valuation; and that the grossest inequity would be worked, should he lose his right through a failure upon the part of the arbitrators to fix a valuation. While, therefore, a court of equity will not undertake to compel an arbitration, which it cannot control, it will in such case make an appraise-lanta, 98 Ga. 92, 26 S. E. 489, 58 Am. St. ment itself, or direct it to be done by its own officer, and will thereafter enforce specific performance of the contract, upon the terms so found. In case the rent under a lease is to be fixed by appraisal, then, if the referees appointed under the contract or lease to make the appraisal are unable to make it, the lessor will be entitled to sue for a reasonable rent. This right to sue depends upon a condition precedent, namely, his having tried to get the rent fixed in pursuance of the terms of the lease, and failing to do so." Jones, Landlord & Tenant, § 346. In the Uhrig Case the court said: "Under the arbitration clause, it was the duty of each party to act in good faith to accomplish the appraisement in the way pro. vided in the policy, and if either party acted in bad faith, so as to defeat the real object of the clause, it absolved the other party from compliance therewith; and if either party refused to go on with the arbitration, or to complete it, or to procure the appointment of an umpire, so that there could be an agreement upon an appraisal, the other party was absolved." The Lowe and Gros Rep. 290, the rule announced by Mr. Lewis St. Louis, etc., Co. v. KnappStout & Co., 160 Mo. 396, 61 S. W. 300. See, also, Cook v. Sanitary District, 177 Ill. 599, mine, and the one which it did determine, was the value of the leasehold for the unexpired term in view of the restrictive clause in the lease. Error is assigned in the admission and exclusion of certain testimony respecting adjoining property owned by the respondent and the use to which it would be devoted. The court gave both parties wide latitude in 52 N. E. 870. We think the evidence was admissible, not as a basis for a specific claim, but as showing the value of the unexpired term. Kersey v. Schuylkill, etc., Co., 133 Pa. 234, 19 Atl. 553, 7 L. R. A. 409, 19 Am. St. Rep. 632; Braun v. Metropolitan, etc., Co., 166 Ill. 434, 46 N. E. 974; McMillin Printing Co. v. Pittsburg, etc., Co., 216 Pa. 504, 65 Atl. 1091; Metropolitan, etc., Co. v. Siegel, 161 Ill. 638, 44 N. E. 276. The appellant presenting the facts tending to show the value relies upon the following cases: Patterson v. City of Boston, 23 Pick. 425; Jacksonville, etc., Ry. Co. v. Walsh, 106 Ill. 253; Commissioners v. Moesta, 91 Mich. 149, 51 N. W. 903; Railroad Company v. Weiden, 69 Mich. 572, 37 N. W. 872; Philadelphia, etc., v. Getz, 113 Pa. 214, 6 Atl. 356. These cases support the contention that such losses are recoverable. of the leasehold. The case was tried to the court, and, as we have said, the finding as to the value of the unexpired term is supported by competent evidence. The judgment is reversed, with directions to enter a judgment in favor of appellant for a sum equal to the difference between $175 and $425 per month for the remainder of the term, plus the $80, loss of profits. DUNBAR, C. J., and PARKER and MOUNT, JJ., concur. (63 Wash. 187) SCANDINAVIAN AMERICAN BANK v. JOHNSTON. (Supreme Court of Washington. April 18, 1911.) [7] "Damages," in law, means an adequate compensation for the loss suffered or the injury sustained. The rule itself is well settled and simple of statement, but its application is often attended with difficulty, on account of the great diversity of circumstances surrounding different cases where the principle is sought to be applied. As was said in Seattle, etc., Ry. Co. v. Scheike, 3 Wash. 625, 29 Pac. 88: It is difficult, if not impossible, to lay down a rule 1. BILLS AND NOTES (§ 537*) — TRIAL-DEof universal application as to what may be FENSES QUESTION FOR JURY DIRECTED considered as elements of damage, as the VERDICT. equities of the parties must more or less depend upon the particular facts and circumstances of each case." This is particularly true as applied to a leasehold which may have no market value in excess of the rent reserved. The appellant is entitled to be paid the value of the unexpired term. The items under consideration are but constituent elements of that value. In principle and according to what we consider the better authority, they are not recoverable as something apart from the leasehold interest. They form an essential part of its value. [8] There is a material conflict in the evidence offered by the respective parties. The court could have found the rental for the remainder of the term either more or less than $425 per month, and the finding would have had abundant support in the evidence. The court saw the witnesses in the action and viewed the premises, and we are not disposed to disturb the finding as to rental value for the unexpired term. [9] The appellant's contention that evidence should have been admitted as to the rental value of the unexpired term measured by "the highest and best use" of the premises cannot be sustained. It is correct as a general principle. The lease, however, limits the appellant's use to "wholesale, retail, and manufacturing harness and saddlery or similar business." It further prohibits the use of the premises for certain specific purposes. The question for the court to deter In an action on a note to which the defense was that the plaintiff was not a bona fide holder without notice, held, that on the evidence a verdict should have been directed for the plaintiff. [Ed. Note.-For other cases, see Bills and Notes, Cent. Dig. § 1879; Dec. Dig. § 537.*] 2. TRIAL (§ 143*)-QUESTION OF LAW OR FACT -CONFLICTING EVIDENCE. Where the evidence upon an issue of fact is conflicting, it must be submitted to the jury. [Ed. Note.-For other cases, see Trial, Cent. Dig. §§ 342, 343; Dec. Dig. § 143.*] 3. BILLS AND NOTES (§ 525*)—ACTIONS—EviDENCE-PAYMENT OF VALUE. Payment of value is a circumstance in determining bona fides, and payment of full value is entitled to great weight, but is never conclusive, except in the absence of evidence tending to show notice or bad faith. Notes, Cent. Dig. § 1834; Dec. Dig. § 525.*] [Ed. Note. For other cases, see Bills and A "holder in due course," as defined by Rem. & Bal. Code, § 3443, subd. 3, is a holder who takes it in good faith and for value. [Ed. Note.-For other cases, see Bills and Notes, Cent. Dig. §§ 819, 820; Dec. Dig. § 338.* For other definitions, see Words and Phrases, vol. 4, p. 3320.] 5. BILLS AND NOTES (§ 339*) - BONA FIDE PURCHASER NOTICE. Under Rem. & Bal, Code, § 3447, which declares that to constitute notice of an infirmity in a negotiable instrument, or a defect in the title of the person negotiating it, the taker or indorsee must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounts to bad faith, the right of a holder is not defective merely by reason of his negligence |